David Suzuki is Canada’s most famous environmentalist, a three-time winner of Reader’s Digest‘s poll of “Most Trusted Canadians.” His media footprint is doubtlessly bigger than all Canadian economists put together. He’s ideally placed to be a powerfully effective communicator of the interactions between the economy and the environment and help Canadians understand what the problems are, and, perhaps more importantly, what the solutions might be. But he’s not.

About a year ago, University of Victoria economics professor Chris Auld wrote a blog post about David Suzuki’s curious inability to understand what the term “externality” means as it it is used by economists. This prompted a certain amount of discussion in the (tiny) Canadian economics blogging community, largely revolving around our collective wonder that Canada’s most famous environmentalist could get the most important concept in environmental economics so badly wrong: Suzuki couldn’t have possibly gotten his version of what an externality means from an economist, or from an economics textbook. Neither does it appear to be a one-off slip of the tongue. As far as anyone can tell, Suzuki has been getting it wrong for some 20 years, which means that there are many Canadians who think they understand what economists are talking about when we use the term “externality,” but who really don’t. If one of David Suzuki’s claims to fame is as a public educator, this is one subject where he has failed badly.

As I said, this emerged a year ago. It would have been nice if David Suzuki could have made our job easier by getting the economics of the environment right the first time, but economists are used to being disappointed this way. But then Professor Auld was made aware of more recent abuse of the term by David Suzuki, which he blogged about here and here. (Yes, you should go read the posts and watch the video therein. That’s why the links are there.) The worst part isn’t the “brain damage” crack (you stay classy, David!), it’s the egregious misrepresentation of what economists do and say. Suzuki’s basic strategy is to make up a ridiculous statement and preface it with “Economists say…”—sort like how the Conservatives keep accusing the NDP of wanting to impose a carbon tax, with the important difference being that imposing a carbon tax is actually a really good idea. Not to mention the accusation that we accept cash in exchange for saying these things.

Which brings us to Mike Moffat’s column in yesterday’s Globe and Mail that summarises the material in Professor Auld’s Suzuki posts and concludes—as does Auld—that David Suzuki owes economics and economists an apology. Reaction was voluminous, swift and largely negative: apparently one of the perqs of being the Most Trusted Canadian is that you can make baseless accusations and still count on a vast supply of unconditional support. (Ottawa Citizen columnist Dan Gardner tweeted that Moffatt should not have been surprised.)

The strange thing is that there’s really no point in making an enemy of a discipline that is in many ways similar to—and largely complements—ecology. When ecologists explain that, in a complex dynamic system with myriad feedbacks, seemingly innocuous interventions can have devastating consequences, economists will nod in agreement: we see similar phenomena in the economy. Environmental economics is routinely taught in economics programs and is the subject of an active field of research.

Nor are economists as a group particularly hostile to the environmentalist movement: this open letter from the 2008 election can hardly be described as the work of anti-environmentalists. If there are disagreements, they are invariably over technical issues about the best way to solve an agreed-upon policy problem.

Many environmentalists have assured me in private—for obvious reasons, environmentalists dare not disagree with the Most Trusted Canadian in public—that Suzuki’s views about economics are not representative of their field, and that it is widely understood that closer cooperation between environmentalists and economists is a key to developing effective policy. I don’t know why David Suzuki goes out of his way to make this cooperation more complicated than it already is.

Forgive me for coming in late, and for not reading the links but I’m in a bit of a hurry just now. You know what would have been neat? If you’d actually pointed out what externality means to economists, and how Suzuki is using it wrong. I know, I’m supposed to read all the links where things would all be made clear. But this is the twitter generation or some such nonsense and nobody has the attention span of a gnat to research stuff themselves. (really, I just don’t have time right now, but the argument stands, I think)

Based on the post above, I don’t think we can even be “sure” that Gordon can define it.

I’m sure he can of course, but it doesn’t seem to me to be too onerous to ask that a blog post entirely about how a word is being misused by a prominent Canadian actually provide a definition of the word and an explanation of how it’s being misused.

Lord_Kitcheners_Own on October 12, 2012 at 5:51 pm

Click on the links. That’s what they’re there for.

ETA: The first time I use the word, I put a link to the Wikipedia article.

Still, Suzuki and economists don’t get to have ALL the fun! English lit majors get to complain too. I mean, I realize that this is a just blog post, not an academic article (or even a magazine article) but still. In a post where the entire argument is “That guy over there’s been misusing a word for twenty years!”, it really wouldn’t hurt to throw in a quick definition to explain what the whole argument is actually about. Telling the audience what the word means and how it’s being misused would really help the reader to decide whether or not they are (or should be) interested in pursuing the further reading on the topic. I even think it could have been done in just a couple of sentences. Something simple like “When economists refer to “externalities” they’re referring to costs and benefits for which a monetary price is not easily and simply calculated for the purpose of including them in an economic analysis (the way that the costs and benefits of an equipment purchase might be). They are NOT suggesting, as Suzuki implies, that said costs and benefits should be excluded from such an economic analysis” (you could have done that better, of course).

Sure, the criticism is a bit old school, especially for a blog post. And, of course, it’s pedantic. Nevertheless, I’m not sure that “I gave you hyperlinks” is the best defence against the argument that this post doesn’t give any direct explanation whatsoever as to the context of the argument that is the central theme of the entire post.

Lord_Kitcheners_Own on October 13, 2012 at 9:03 am

“You know what would have been neat? If you’d actually pointed out what
externality means to economists, and how Suzuki is using it wrong.”

It’s been my experience that academic economists are more interested in preaching than teaching. Frankly I don’t know why they’re given space in the media if all they mostly do is use to act like any other run of the mill dull witted opinion writer.

“The idea that economists do not care about externalities is a strange one, given how prominently they are featured in economics textbooks. An externality is, simply put, a spillover effect. It is the unintended costs or benefits from a transaction or decision experienced by third parties (that is, they were external to the decision). It does not mean phenomena that are external to economic modelling or things outside the interest of economists. Since, as Dr. Suzuki points out, the world is full of externalities, the concept is crucial in economic research.”

It should be noted, in the Mike Moffatt piece that slams Suzuki, his philosophy for dealing with externalities (unwanted side-effects) is to get government off of the backs of businesses and let them sort it all out. That government regulations actually destroy the environment.

For example he says a “lack of private ownership causes a resource to be overused.”

So the free-market approach is really just about cooking up some flaky theory that justifies ignoring the problem and blaming “gubment”.

Of course we know from previous experience in eliminating acid rain and ozone-destroying CFCs that government regulation is the best way to deal with these externalities. (Companies like Inco said the anti-acid-rain regulations would bankrupt them; but they adapted and prospered.)

BTW, economists are spread across the political spectrum, so one will get different responses on how to handle different forms of externalities…

So I guess I can’t get you to elaborate on your tweet that the Green Party doesn’t understand externalities, either?

JanBC on October 12, 2012 at 6:28 pm

Sure. Look at page 10. Same mistake Suzuki makes.

Stephen_Gordon on October 12, 2012 at 7:37 pm

Well not quite if page 10 is the reference. They are simply pointing out that those costs have not been internalized. From Wikapedia; ” The market-driven approach to correcting externalities is to “internalize” third party costs and benefits, for example, by requiring a polluter to repair any damage caused.” http://en.wikipedia.org/wiki/Externality#Implications

I am in agreement that Suzuki is not very helpful in explaining economics and it is all the more shameful given the obvious parallels to ecology.

What would be great is to see this as an opportunity to talk more about the way to deal with these external costs. Who knows maybe you could teach an old dog a new trick!

Brian Burt on October 13, 2012 at 7:48 am

They’re tweeting, I suppose, because they don’t want to stand by and see error accepted as truth. As Gordon said, Suzuki has a huge media footprint–how can they compete against him?

Perhaps by making discussion of the externalities of the industries they are talking about front and center whenever they speak of these industries. Perhaps by including “but something must be done to ensure that the costs the oil industry is imposing on the rest of society are factored into the business costs” the next time they go on about how it needs less government regulation, less taxation, or how lowering corporate taxes doesn’t hurt society at all because the overall revenue picture doesn’t change, etc.

This is
what they do – tweet and retweet/blog and reblog each others’ same opinion.
Chris Auld is a recent recruit to the “Economist Party” which for
some strange reason only includes those that are like minded (right leaning)
economists with little real world experience.

In other
forums this is referred to in the pejorative: “Spin, and echo
chamber”.

Have you
ever seen Gordon, Moffatt and others ever blog/tweet *specifically* about the
“externalities” of the oil sands – proper def’n or not? I can think
of many where they describe how to maximize production, never on the other side
of the equation.

Even when I ask them specifically about such a topic, they just do their
ostrich routine. Cross posted from WCI to Chris Auld’s original blog, also
ignored:http://chrisauld.com/2011/08/2…

Take out the names if they bug you and read what he sad, “Have you ever seen any well known economists blog or tweet specifically about the externalities of the oil sands and how or if they should be addressed?”

I mean, I know of plenty who comment about how they’re all well and good and government should just get the hell out of the way, but I don’t think I’ve seen a single one ever say, “Look, we need government to come in to ensure these externalities are addressed.” If I’m wrong, by all means please point it out to me, I’d be happy to see it.

Until such things start getting the same type of attention as the economists who are screeching about how increased regulation/taxation on them is a bad thing, it’s not very hard to understand where Suzuki came by his opinion.

If you think “greenhouse gases” are the main externalities, you are sadly misinformed.

Dot on October 12, 2012 at 6:21 pm

“please point it out to me”
Sorry, but just sayin’ so don’t make it true.

Case in point, it wasn’t that long ago that you were looking at the issue of foreign takeovers.. and pretty much arguing that no externalities should be considered because they weren’t “economic” enough.

So forgive me if when you say economists have written about externalities wrt oilsands I’m a bit doubtful. Especially because of your carefully worded answer. Whether you’ve written about climate change, and whether you’ve written about externalities involved in the economics of the oilsands are two different things.

Thwim on October 13, 2012 at 2:40 am

“I’ve written about climate change policy extensively. So have other economics bloggers. Satisfied?”

That was good of you to debunk Harper’s “job killing carbon tax” propaganda.

But you concluded that all green regulations kill jobs, which is a fallacy.

The reality is that green regulations can spawn all sorts of new industries that find ways for businesses and people to become more energy efficient and/or pollute less. This ends up creating GDP growth, business opportunities and jobs.

When corporations are allowed to ignore externalities (e.g., pumping raw effluent into a river) this does not create any jobs. If they are forced to deal with them because of government regulations (e.g., process the effluent to make the runoff non-toxic) this creates new industry and jobs.

nakedApe42 on October 13, 2012 at 8:31 am

Go back and read that piece again.

Stephen_Gordon on October 13, 2012 at 8:36 am

The most comical aspect of this is nobody tunes in to Suzuki to hear his thoughts on economics. I doubt many people even knew he had opinions about economics until a handful of economists started whining about it.

I believe Dr. Suzuki was not lamenting about economists not taking externalities into account but that corporations and the Harper Govt seem to be willing to ignore them and there cost. If Gordon and his profession would perhaps point out the free ride corporations receive to the detriment of the tax payer when we allow the commons to pick up the cost of externalities perhaps Suzuki wouldn’t need to explain the reality of the situation.

Andrew, just b/c there’s a few pages in a text book on the topic, and it is taught in some fashion doesn’t mean it is mainstream or top of mind.

I took a similar course to what Moffatt now teaches many years ago. One case out of many touched on this topic. It’s an afterthought for many, it seems. Not just for academic economists, but their students now in the workforce.

No, externalities are not a minor concept in economics. A Moffat wrote in his Globe piece, externalities feature prominently in academic research. It arises in business, too. Externalities are not just about the environment, either.

Now, the whole of introductory micro may not be about externalities, but the point of that course is to give you a broad understanding of microeconomics as a whole, not to spend 100 hours talking about pollution, neighbourhood beautification, etc.

If you follow the link I provided earlier, I was also raising social issues about boom/bust and diverting a generation of high school graduates .

If it is now so prominent in academic research (which would seem a corollary to having neglected the field in the past), why does it not figure into our discussion nationally?

For example – Jack Mintz just released a study comparing royalty rates across jurisdictions – and found (not surprisingly) that AB royalty rates are just fine the way they are now in order to attract more and more foreign direct investment (I’ve heard numbers as high as $600 billion). And allowing firms to deduct expenses before paying royalties is just peachy.

Well, duh – yeah the lower the rates and taxes, the more companies want the resource. These studies are almost always about how to ensure full speed ahead in maximizing production (not profit which is different).

While advocating max dev’nt, these types of economists then say, well, if YOU want to address externalities, THIS is the best way.

I guess I differ as to whether academic economists (unlike those employed by partisan think tanks or industry advocates) should be offering/providing n “objective” balance publicly if indeed externalities figure so prominently in academia.

I think they should. I don’t see that they do.

Dot on October 13, 2012 at 8:23 am

Did you read Moffat’s piece? The importance of externalities (in particular dealing with environment, but in other areas as well) aren’t limited to a few pages in a textbook, they’re the main focus of vast swaths of economic research, and are taught to every first year undergrad economics students as examples of market failure which require other social institutions to correct (regulation, pollution taxes, property rights/tort law, custom). As Moffat noted in his article, the winners of the last few nobel prizes in economics have been recognized precisely for their work on externalities.
The real problem with Moffat’s critics is that they share Suzuki’s cartoonish vision of what economists say and believe (apparently, they’re all right-wing free-market libertarians – who support carbon taxes), with no real understanding of what they actually believe. I can understand Moffat’s frustration.

The real problem with Moffat’s critics is that they share Suzuki’s cartoonish vision of what economists say and believe (apparently, they’re all right-wing free-market libertarians – who support carbon taxes), with no real understanding of what they actually believe. I can understand Moffat’s frustration..

Well, sure you would Bob, because as as a regular longish winded poster on WCI, I recall, you recently stated that you “appreciate reading lefty views because it only confirms how correct your right ones are” or words to that effect.

Cartoonish, yes. in the Bizarro world context.

Dot on October 15, 2012 at 9:22 am

Thanks for proving my point with an utterly unsubstantive response.

Bob Smith on October 15, 2012 at 5:18 pm

You’re right Bob. You deserve a more substantive response. So, here it is:

You say “I can understand Moffatt’s frustration.” Really? Why?

As a commenter on the G&M noted in Moffatt’s follow-up piece today (does he ever know when to stop digging?) [Mark Shore 1:17 PM on October 15, 2012:]

What really seems to have set economists’ teeth on edge were several instances of Suzuki quoting Hazel Henderson’s decade-old remark that “conventional economics is a form of brain damage.”

Really? This thought originally comes from “Hazel Henderson… an evolutionary economist, syndicated columnist and consultant on sustainable development.”

I don’t recall being told that before.

But, in terms of MM’s credentials, Mr. Shore points out that he doesn’t even fit the definition of an “academic economist”, so why should he be offended? :

(By the way, I’m not sure that a brand-new Ph.D. in Management Science on dynamic pricing models, and no publications in professional journals, makes Moffatt the most credible spokesman to defend the large community of academic economists. But that’s another matter.)

“But, in terms of MM’s credentials, Mr. Shore points out that he doesn’t even fit the definition of an “academic economist”, so why should he be offended?”
Not sure what his credentials or background have to do with anything, either his ideas are right or they’re not. His academic background is (and should be) irrelevant to the exercise (do you have to be a visible minority to speak against racism?). If the only response “Mr Shore” has to Moffat’s argument is questioning his credentials and background, Shore loses the debate.

Bob Smith on October 17, 2012 at 8:46 am

In the field in which you practice, he wouldn’t qualify as an expert, so his opinion carries little weight, no moreso than your’s or mine.

Oh, bravo, you found a policy paper written by prominent economists that doesn’t mention environmental externalities, I guess that proves your point *eye roll*.
That paper doesn’t purpor to be an exhaustive analysis of all the implications of all the economic implications facing the Canadian oil industry. It’s focus is very narrow – and set out in the first line for anyone who bothers to read it – “This report examines the structure of the OIL EXPORT MARKET faced by Canadian producers” (emphasis added).
Nothing wrong with that, academics and policy makers often prepare papers with a narrow focus, no doubt someone else is preparing papers on the environmental impacts of oil production, without focussing on the structure of the oil market.
If Gordon can’t be bothered to answer your question, it might be because it’s so obviously silly.

Bob Smith on October 17, 2012 at 8:41 am

Riiight. So narrow in scope that it tells us how much it will result in increased GDP, taxes and employment for Canada and each and every province individually. These numbers not representing just the “narrow scope” of direct employment, taxes and GDP generated by the exports, but are generated by a model which “…generates broad multipliers for income, employment and taxes bases on shocking the model with injections of revenue from new purchases of Canadian products.”
It certainly is “narrow” in the sense that their accounting added up the credits and ignored the debits.

lenny on October 17, 2012 at 6:36 pm

That’s a good point. First when it comes to “economists” and “externalities” one must remember that there’s a broad left-right spectrum of economists.

On the far right, you have free-market ideologues who are against government involvement in the economy. They believe that a free-market economy will magically sort everything out for the best.

Mike Moffatt appears to be in this camp. In his piece against Suzuki he claims a “lack of private ownership causes a resource to be overused.”

That seems absurd to me. Corporations want to develop the oil sands as quickly as possible because expansion is the quickest way to boost share value and corporate bonuses. The 2008 sub-prime housing meltdown was predicating on unsustainable behavior: banks signing as many predatory mortgages as possible without concern most would default. (At the heart of the collapse was Lehman Brothers’ Richard Fuld who made a half-billion running his company into the ground…)

So libertarian economists may study externalities. But in the end, they are more concerned with short-term corporate profits than dealing with the costs that externalities pass onto society. Fact is we need government regulations and centrist economics for that.

I read the Moffat piece a few times, and I’m not sure how you reach your conclusion that Moffat is in the far right camp – he may well be, but I don’t see it in that G&M column.

Sure, he does mention the Tragedy of the Commons problem, which links to the idea that private ownership of a resource would tend to reduce (eliminate?) its overuse. If I’m not mistaken the important concept there is ownership, whether that ownership is public or private or some other method is quite secondary. It would have been helpful if Moffat had clarified that.

But more importantly, in the very next paragraph Moffat goes on to mention that “If so, then he is correct that renewable resources can be depleted to extinction unless the proper institutions are established”. I take his use of the word institutions to include governments, or more correctly to not just limit ownership to private entities.

Which in the case of GHG means that the public needs to assert its ownership of the air that we all breath, and start charging people to make use of the atmosphere as a dumping ground for GHGs.

Of course you can’t publicly point out that David Suzuki is wrong. That would be like saying Al Gore winning the Nobel Peace Prize for a poorly sourced PowerPoint presentation destroyed any credibility the prize once had.

Suzuki, like all environmentalists doesn’t give two hoots for anything except the money he receives. The cost their “externalities” will always increase, their definition is designed to be so. It’s not about the environment, it’s about money, politics, and power.

It’s just projection. Not caring for anything but money himself, he can’t imagine anyone else doing so.
A few weeks back I saw Suzuki loading his groceries into his Toyota Echo. Maybe he gave his staff a day off from shopping, cooking and chauffeuring him in his stretch Hummer just to see how the rest of us live.

Yes, climate-science deniers tend to resort to the straw man argument: they associate human-caused global-warming theory with Al Gore and David Suzuki and then attack them to attack it.

Now Suzuki is trying to discredit economists using the same kind of straw man device.

Suzuki should really embrace economics if he wants to create a society that is environmentally responsible — progressing towards 100% reliance on renewable energy and recyclable materials — because he will need economics to do it.

Fact is green regulations can create new industries and with them GDP growth, business opportunities and jobs.

I would advise that he looks into the centrist Keynesian system. The free-market system (on the far right) creates a deregulating race to the bottom, winding back the clock on progress. Communism (on the far left) is a revolution that takes on a life of its own…

Politics is also extremely important in a democracy where people have to choose to go green. Because they can just as easily choose not to. So balanced policy and compromise are essential to progress.

as the environmentalists are the govt’s new “cash cow”, now, ex: eco-tax, eco-fees, env. tax, env. fees. etc, hidden or not. Why does emissions testing appears to be crucial for one province, when in fact, the next one (like quebec- ontario), does even care to bother about it all?

Agree that Suzuki has a large media footprint and he is well placed to be a powerfully effective communicator.

Wrt externalities, I would characterize Suzuki as being intellectually lazy rather than outright ignorant of what the term means. Further, yes he seems to be dismissive of economists. Putting those two shortcomings together it is fair to say that he could be unnecessarily antagonizing some potential allies.

But it would be easy to overestimate the gains that would occur if Suzuki was more rigorous with definitions/economic theory and/or less antagonistic towards economists.

To a large extent the two groups of people – both those who agree with Suzuki that action should be taken and those who disagree – actually have a good enough understanding of externalities, despite Suzuki’s sloppiness, and most of those that don’t understand aren’t going to figure it out if Suzuki became more rigorous.

And while the economists are obviously peeved by Suzuki’s verbal jabs, they mostly still seem to be professional enough to get past the insults, and are already advocating largely the same actions that Suzuki is advocating.

Politicians aren’t taking action because they don’t see it as enough of a vote getter, and the majority of voters are not demanding that politicians do something because (while they basically understand the concept of externalities) they don’t agree that the externalities are significant enough to warrant action.

Suzuki, and his understanding of externalities and his antipathy for economists actually has little to do with the lack of progress.

“Putting those two shortcomings together it is fair to say that he could be unnecessarily antagonizing some potential allies.”

Agree.

“Politicians aren’t taking action because they don’t see it as enough of a vote getter, and the majority of voters are not demanding that politicians do something because (while they basically understand the concept of externalities) they don’t agree that the externalities are significant enough to warrant action.”

Dissagree. Suzuki is doing harm because he is agreeing with the feckless politicians who say and rely on the perception that the economy and the environment are diametrically opposed. Demonizing economics and capitalism is a recipe for marginalization.

“There aren’t any politicians who actually say that the economy and the environment are diametrically opposed, are there?”

Neo-cons like Harper certainly take that position. Canada has the worst environmental record in the developed world because Harper says acting responsibly “kills jobs.”

Of course, in northern Europe they have strong green regulations, stronger economies and lower debt. Since Harper has come to power he has killed 500,000 export-related jobs. So he has yet to “create jobs” with his dead-end dirty-energy economy and environmental freeloading…

Sure there are, and the media follows this line: because the media creates ‘balance’ in its stories by pitting 2 opposing opinions, every single story on the oil sands in memory is framed, or made into a conflict, by pitting “enviroment” VERSUS “jobs”, jobs being shorthand for money/economy.

I am from BC, and there are many people who for instance think, despite the government’s story, that the pipeline does not fit this narrative: it is not there now (the jobs are theoretical) and besides, it is not worth doing at ANY price. There is NO economy that “balances” the risk, it is not 2 ‘sides’ that have equal weight. It is just, no. Not at any price.

“Putting those two shortcomings together it is fair to say that he could be unnecessarily antagonizing some potential allies.”

Don’t get suckered. Economists like to claim they’re an ally or potential ally but the reality is that most of them either don’t care or worse, are an obstacle. This very post is a prime example of the type of “help” economists give to environmentalists.

I don’t think we should get sucked into the trap of “the economists” vs. this or “the economists” vs. that. The fact is there are economists across the entire left-right economic spectrum. And they don’t all speak with one voice. Far from it.

Economics is like politics. You have hard-right conservatives who prefer a law-of-the-jungle type of society. You have socialists who want an egalitarian society. And all sorts in between.

The worst thing one can do is mistake economics for science. With science we can jam billions of transistors onto a computer chip the size of a finger nail. With economics, metaphorically speaking, we can’t tell if the Sun goes around the Earth, or the Earth the Sun…

It’s all just a little bit of history repeating:

“But to-day we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time — perhaps for a long time.” (John Maynard Keynes, 1930)

I agree with you and would suggest that the entire “subscience” of econometrics was developed for two primary reasons:
1) To sufficiently muddle any argument using arcane mathematics to manipulate any point the author cared to make and simultaneously hiding the suspicion that the author really has no idea what the hell he/she is talking about.
2) To offer as proof that economics is a valid “hard science”, moving it out of the Faculties of Social Sciences and into Commerce faculties, where it often serves as a ready handmaiden for whatever crackpot theory the Fraser Institute types come up with as a justification to further screw the public, much like the paid courtroom witness.
From the heyday of Keynesian economics literally saving the industrial nations from itself to the nadir when Milton Friedman was awarded the Noble price for his monetarist supply-side theories of greed justification.
One scarcely mentioned tragedy was that after the infamy of the Noble miscalculation, myriads of economic textbook writers jumped on the bandwagon and produced textbooks from the introductory level through to advanced. Suddenly, an “economist” such as Hayak was viewed as a visionary for his theory of economic eugenics. The bottom line is that there is a whole generation of people out there whose perception of economics has been slanted rightward, the results are obvious.
The “science” of economics has proven itself to be little more than casting chicken bones and letting the biases of the devinator interpret the results, and like the proverbial stopped clocked, their “rightness” is perceived as validation when often they merely just got lucky.

Yes I agree there is a lot of stat-cooking, cherry-picking and politics when it comes to economics.

The worst offenders, in my opinion, are the free-market libertarians. They have an ideological model they claim describes the economy. Unfortunately (for society) it is Aristotelian and entirely self-serving to businessmen.

Krugman calls these types, the Very Serious People. They dress and act in a way that exudes authority; but it’s nothing more than a confidence scheme. (They remind me of The Who song, “Eminence Front.”) When judged on the results of their policies (most of which have failed colossally: from self-funding tax cuts, to recklessly lopping off regulations, to a suffocating 2% inflation target) they are nothing more than incompetents.

So it’s time to bring some scientific rigor to counter the dismal ideology.

Fact is when people have high living standards they are able to maximize their full human and economic potential which creates the most productive economy and society. When people are poor, oppressed and cheated out of their rightful wages and benefits, this destroys wealth creation and human potential.

I find the Keynesians describe the economy the most accurately. Their IS-LM theory best describes the current “colossal muddle” the free-marketers caused with 30 years of anti-Keynesian reforms. Their demand-side model (that ensures people share in wealth creation) will also work far into the future when machines and AI take over most of the economy putting most people out of work. A free-market economy would collapse (yet again…)

nakedApe42 on October 14, 2012 at 3:28 pm

I’m gonna go right up to Alaska and ask the good people there how well they feel Exxon has honoured its commitments following the Valdez episode. Did I say commitments? How about ‘court-ordered commitments?’ Yeah, I would say externalities are external to any kind of argument you care to name coming from economists. So cute that reasonable-at-times-journalist Gardner would side with the economists. So surprising, not, I guess. ‘Turn right.’ And the teenaged imp posing as an adult in a suit turns left instead! A real brave crew leading us all. Oh and you’re not supposed to criticize articles for issues of clarity and so on and grammar but what about the following from this article:
”Suzuki’s basic strategy is to make up a ridiculous statement and preface it with “Economists say…”—sort like how the Conservatives keep accusing the NDP of wanting to impose a carbon tax, with the important difference being that imposing a carbon tax is actually a really good idea. Not to mention the accusation that we accept cash in exchange for saying these things.”

Ay, yaieh yeah (spelling). Try again. I don’t understand a thing. Epic fail (on my part?) and I really hate that expression. There was another one that I hate somewhere in this article. No matter.

If Suzuki is “one of the most trusted people in Canada” as he’s been presented then I think the people of Canada are far too trusting. I saw the guy on some news program, years back, tapping his own head and saying “Duh” in apparent mockery of the people who disagree with his prescriptions for what ails the world. If Suzuki’s argument is (to paraphrase) “I’m smart and you’re stupid” then I wouldn’t trust him to collect my garbage let alone tell me what to think.

I thought we’d all agreed that checking references and following links is far too onerous.

*rimshot*

My point is that Suzuki himself is the face and the voice of the foundation. If he chooses to present himself as a complete assh*le then I’m prepared to accept him – and his foundation – at face value. No further investigation is required.

He may or may not be an asshole, but I don’t see how that has any bearing on the veracity of what he, or the organization that bears his name, are saying.

lenny on October 14, 2012 at 2:08 pm

If you make your arguments by attacking strawmen, then you’re just making poor arguments. If you label your strawmen as “Economists” prior to attacking them, for the words that you’ve put in their mouths, then your argument is not just poor, it is dishonest.

If you are dishonest, as I contend that Suzuki is, then your arguments are not worthy of consideration.

lgarvin on October 14, 2012 at 5:08 pm

That he’s dishonest(in your opinion) is an entirely different than matter than your original assertion, which is what I was responding to.
As to his alleged dishonesty, maybe you could have a look at the paper I linked to up near the top of the comments and tell me where the UofC economists account for externalities in their assessment of the economics of building pipelines.

lenny on October 14, 2012 at 5:17 pm

Gordon’s source is a Reader’s Digest survey. In it he beats out Mike Holmes. Not exactly the Nobel committee. For the number of people who may respect Suzuki (I have mixed feelings about him) there are probably as many who loathe him. They give him the same disregard they do Al Gore.

I think right-wing economists are so often wrong they are well deserving of utter scorn and ridicule.

They said tax cuts for the rich would “create jobs.” They bankrupted America and other countries. They said free trade would “create jobs.” It took a wrecking ball to living standards. They said deregulation would “create jobs.” It caused a second global economic meltdown and the present mess we’re in. They said austerity measures would “create jobs.” They killed economic growth pushing teetering economies over the edge…

From about 1930 to 1980, free-market ideologues were relegated to the lunatic fringe. Well we better get out the butterfly nets and put ’em back before these crackpots destroy civilization…

I am only being critical of free-market libertarian economics and economists. They are on the far right of the left-right economic spectrum. And I am being critical of their anti-Keynesian free-market reforms over the past 30 years that utterly failed to deliver on promised prosperity.

The centrist Keynesian system, however, got incredible results in the post-war era. It created modern living standards which were unprecedented in history. It produced rising living standards for all segments of society. Governments also paid down most of their debts (America from 135% debt/GDP to 35%; it’s now back up to 103%.)

Over the past 30 years, we had an economic tide that only raised the yachts — living standards were downsized for everyone else. Government debt and inequality soared. And the period culminated in another global economic meltdown (the first one in 1929 was also the result of free-market economics — it was the reason Keynes developed the mixed-market system in the first place.)

So the reality is the Keynesian system got results and the free-market system failed as bad as communism. It’s time to stop fooling around and call these free-market ideologues on their confidence schemes that attempt to arrogate sheer incompetence to the level of science.

As others have mentioned, in a post this long a few sentences about the nature of this hateful error might have been appropriate. The quick reader of the column + comments is left with the impression someone with specialized knowledge is very angry that a non-expert has given a term a more “lay” definition, and then later is ready to pick up his internet and go home over it. Mr. gordon may be well justified in his tone, but that’s not evident without some digging all readers might not delve into.

At this point, both our times are better spent with you figuring out what you did wrong and rejoining the conversation then.

Good day.

GFMD on October 13, 2012 at 4:42 pm

Whoa whoa whoa. You think people read an online news magazine because they want to get informed? How cute! A large percentage of the readership here comes to whip themselves into a fury over some imagined slight, tap angrily on thier keyboards, then soothe the burn by covering themselves in the salve of like minded opinion. They already know everything they need to know and they come to places like this to affirm that.

It’s an issue of politeness. Links should be optional in an article if the writer has any consideration whatsoever for the reader or their time. They should not be required reading in order to understand the subject material.

Use them to provide additional, non-necessary information, or for verification purposes. Don’t use them because you can’t be bothered to summarize the information therein when that information is the very core of the piece you’re writing.

I, for one, hope that Gordon is able to “get past” all of the tangential discussions, that he does not pick up his internet and go home.

Sure, if I was editing his posts I might cut back on the use of links and move some of that content into the post itself. But I find his posts to be thought provoking, and I’m sure that I can get used to his use of links if that is what it will take to keep him posting here.

I am at a loss to understand your damnation. Methinks you feel ones self image or worth improves with neglect to refelect on the topic at hand. Comment is usually enjoyable, however image building is easliy spotted

1) They aren’t; GDP is best viewed as a measure of total activity, for good or for ill..

2) No, because GDP isn’t the only measure economists look at. When it comes to things like pollution, it’s not useful. These are things we teach. Suzuki’s error is that he didn’t bother to find that out. That’s not what he should be ashamed of – although why he couldn’t be bothered to find this out is a *bit* shameful. What he should be ashamed of is then going on to fabricate stuff and put it in the mouths of economists.

So how do we get politicians to pay attention to these other economic measures (other than GDP), and where appropriate take actions?

I get the part where economists are offended by Suzuki’s style; nobody appreciates others mischaracterizing their motives, either intentionally or through laziness – there is no justification for that.

Setting that aside, it seems that at its simplest Suzuki is extremely frustrated that the field of economics has evolved to allow externalities to be downplayed at minimum and ignored at worst.

Yes that reminds me of the deep-sea oil rig that blew up in the Gulf of Mexico and spewed oil for three months. When engineers were designing the rig, no doubt they considered what would happen if there was such a catastrophic failure. But it wasn’t exactly in the oil corporation’s self-interest to put in place a contingency plan to deal with it. Instead they privatized the profits and socialized the externality.

So the free-market ideology based on the idea that self-interest balances itself out is a fallacy. Clearly we need government on the backs of businesses to ensure all of these “spill-over” effects (pun intended) are factored in before disaster strikes.

Piping and shipping raw bitumen is an utter folly. Unlike processed oil which floats, bitumen sinks right to the bottom. So *when* there is a bitumen spill it will probably never get cleaned up (causing a potential Chernobyl-style disaster.) (Of course, conservative economists would claim processing the oil in Canada would “kill jobs”…)

nakedApe42 on October 14, 2012 at 3:51 pm

It’d be nice to get a response to this. It seems to me that either these economists at the UofC have abandoned standard practice in their paper, or as Suzuki claims, externalities are routinely ignored.

lenny on October 14, 2012 at 6:42 pm

Umm, are you sure you replied to the right comment? Same for your reply (goalposts) immediately prior to this one.

$23305474 on October 14, 2012 at 9:26 pm

Perhaps you should consider what “allow to be downplayed” means.

Specifically the word “allow” seems to be the one giving you trouble. Even if we/you continue to ignore lenny’s comment, the fact remains that, as economists, there’s been precious little push from you to get “externalities” into anything written for public consumption. And indeed, significant effort to specifically write out the possibilty of externalities being a significant factor.. such as your very own article on foreign take-overs.

Thwim on October 15, 2012 at 3:02 am

And are we now going to move the goalposts to “economists don’t talk *enough* about the environment?” Economics has many subfields, and most of them have nothing to do with the environment. Do we now have to preface studies about monetary policy with boilerplate about environmental externalities?

The phrase “the field of economics has evolved to allow externalities to be downplayed at minimum and ignored at worst” was not intended to assign all of the blame (or any of the blame for that matter) for this apparent state to any or all economists. I’m not into blame.

For whatever reason(s), it appears that our politicians don’t feel compelled to consider externalities, at least as it relates to GHGs.

I was simply asking you if you had any thoughts on how this could be rectified, if at all, perhaps by economists, but moreso by all of us.

And maybe the answer is “Nothing needs to be done – politicians are implicitly considering the externalities of GHGs, and by doing little to stem GHGs are essentially saying that the costs associated with them are small or non-existant.” If that is your contention, you could have just said that, and I would completely agree.

I call that broadening the discussion from the initial premise, but I now see how you might call that moving the goalposts.

$23305474 on October 15, 2012 at 8:33 am

1) Of course I understand why externalities are not included in GDP but I would dispute/quibble your first statement. I would agree the GDP is a measure of total economic activity. Activity was an english word before being co-opted and narrowed by economists and in its standard usage within the population, total activity would have to include pollution.

wrt 2) Economists are a little like spiderman. (with great power comes…) Economic growth, employment and trade balance are enormous drivers of policy and as a result society. The rest of the stuff you guys do is academic bafflegab, interesting to discuss but not really used for anything like a government policy. Moreover you guys know this.

For someone like Suzuki this must be maddening. In his world, the “price” of externalities completely dominates the economy, and yet the only economic figures that make the morning news on the radio completely exclude them.

You talk as if all economists are on the same page and would come up with the $2/l for gasoline, when nothing could be further from the truth.

It’s time for people to stop generalizing about what “economists say.” There is no such consensus. Claiming “politicians say” would be just as absurd.

Fact is economics is divided up along a left-right political spectrum. People tend to choose their position on the economic spectrum based on how they feel society should be structured. Right-leaning people favor a strongly hierarchical model; left-leaning egalitarian.

The reason economics is not a science is because political agendas get in the way. But hopefully more scientific rigor will be demanded of economists over this decade of economic quagmire. Fact is an economy is most productive when people have high living standards; least efficient when people are poor. So turning economics into a science will be of benefit for everyone.

nakedApe42 on October 14, 2012 at 3:00 pm

“Fact is economics is divided up along a left-right political spectrum.”

You keep saying that. It`s not actually true.

Stephen_Gordon on October 14, 2012 at 3:33 pm

Case study: How did the debate over that alleged externality Dutch Disease split?

Dot on October 14, 2012 at 4:00 pm

According to a recent article in the G&M, Canada is suffering from not one, but *two* Dutch Diseases…

“There is some evidence that Canada is suffering from not one but two ‘Dutch diseases.’

“The first one is well-known … the Canadian dollar has overshot and that has contributed to the decimation of our manufacturing industry, making it less competitive on world markets, as happened in the Netherlands in the 1960s.

“There is, however, a second Dutch disease, one associated with low productivity growth and low rates of unemployment… When unions, employers and the government agreed to wage moderation … Dutch rates of unemployment fell to quite low levels…. However, the slow increases in … wages, combined with weak … consumer demand, ultimately slowed down productivity growth.

“A similar phenomenon has happened in Canada: the monetary policies conducted by the Bank of Canada to reduce inflation … led to two deep recessions during the early 1980s and 1990s, which significantly weakened the power of labour unions, leading to de facto wage moderation. …

“Thus the Great Moderation in wage and price inflation has not delivered the goods that officials at the Bank of Canada had promised. Low inflation has delivered neither solid economic growth nor strong productivity growth.”

Perhaps you don’t comprehend the left-right economic spectrum. On the far left is communism (100% government control over the economy.) On the far right is free-market libertarianism (no government involvement in the economy.) In the center, is the mixed-market system created by Keynes during the Great Depression. That is generally speaking. Across the spectrum there are many economic shools of thought. There is little, if anything, all economists agree on.

Oh, I know the classification exists.But those are labels applied by non-economists, not the ones we give to ourselves.

Stephen_Gordon on October 14, 2012 at 4:36 pm

In order for that theory to be true, non-economists would’ve had to have created the various economic schools in the first place…

nakedApe42 on October 14, 2012 at 6:11 pm

“There is little, if anything, all economists agree on.”
Actually, that statement couldn’t be further from the truth. There are many areas of economic theory and research where there is an overwelming consensus amongst academic (and non-academic) economists. Case in point, there is an overwelming consensus amongst economists in favour of a carbon tax to internalize the externalities associated with polution.
See, for example, this letter in favour of BC’s carbon tax (http://thetyee.ca/Views/2007/11/01/CarbonTax/) signed by most (if not all) of BC’s academic economists (including some of Canada’s leading resource and environmental economists). More generally, in a recent survey of 41 prominent US economists on the optimal means of controlling vehicle carbon emissions, only one disagree with the proposition that the carbon tax was the best means of achieving it (and that one disagreed only on the grounds that the problem was too big for a politically feasible carbong tax to have effect) (http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_9Rezb430SESUA4Y)
By using his profile to present a cartoonish (and inaccurate) view of modern economics, David Suzuki is both undermining his own credibility and the credibility of an academic discipline and academics who largely agree with him and his proposed solutions. Talk about shooting yourself in both feet

Bob Smith on October 15, 2012 at 8:01 am

Bob, it seems to me, based upon your postings on WCI that you have some economics background, possibly now working in the tax accounting area now – maybe corporate work. I think that would be relevant to divulge.

Dot on October 15, 2012 at 9:30 am

If you read my posts on WCI, I make no secret of my background or current profession (although you clearly don’t read them closely if you think I’m an accountant, or that my current profession has much to do with my background in economics). All of which has jack-diddly to do why David Suzuki (and his fellow-travellers) are misguided in dismissing economic theory and economists who (as I noted in my previous post) largely agree with (and developed) his main substantive policy (i.e., a carbon tax)

Bob Smith on October 15, 2012 at 5:33 pm

*”There is little, if anything, all economists agree on.”
Actually, that statement couldn’t be further from the truth.*

In my opinion, your assertion is absurd. You claim that just because most economists might agree on a carbon tax they agree on most everything else.

Anyone can read the economics/business sections of newspapers and prominent blogs to see there are diametrically opposing positions on practically all issues: from corporate tax cuts, to austerity vs stimulus (in a slump,) to monetary policy (debate over proper inflation target or NGDP target,) to the Canadian Dutch Disease issue, to levels of social spending and sustainability, to financial regulations, to the role government should have in the economy, to free trade vs fair trade, etc.

nakedApe42 on October 15, 2012 at 3:45 pm

Actually, in a lot of those discussions, there is substantive agreement among economist as well (certainly free trade is another big picture policy where there is substantial agreement amongst economists as to its desirability, accross the political spectrum).
Moreover, even where they disagree on specific policies, they agree on the underlying analysis, but disagree on their interpretation of the facts. For example, one can accept that corpoate income taxes are relatively inefficient ways of raising government revenue or that they are borne largely by workers (which, at least for a country like Canada, I think represents the consensus view) but believe that the government should still levy them (presumably on the basis that the revenue can be used to offset those harms). Or, one can look at the same underlying consensus conclusion, and conclude that Canadians would be better off by lowering corporate income tax.
Consider an anology in other field. Take two doctors, who may look at the same patient, but propose different treatments. Those doctor may come to diametrically different treatments in that instance, but not because they diagree on “practically all issues” – after all, they’re applying the same canon of medical knowledge to their patient. It is possible to agree on almost everything and still come to different conclusions (and to do so on some basis other than ideology).
And that’s Stephen’s point, as a rigorous academic field, there is a broad consensus among academic economists in a lot of areas, regardless of their ideological predilections (and, where there is disagreement, it is often not a function of ideology).
In any event, I’d suggest to you that since very few of the people who write in the economics/business section of newspapers are economists, the policy debates in those sections are probably not reflective of contemporary economic thinking.

Bob Smith on October 15, 2012 at 6:20 pm

“certainly free trade is another big picture policy where there is substantial agreement amongst economists”

Joseph Stiglitz is a Nobel Laureate and supports fair trade over free trade. Paul Krugman, also a Nobel Lauereate, is not as gung-ho over free trade as he once was:

“What all this comes down to is that it’s no longer safe to assert, as we could a dozen years ago, that the effects of trade on income distribution in wealthy countries are fairly minor. There’s now a good case that they are quite big, and getting bigger.”

One can imagine that if the comparative advantage one country has over another is simply the ability to bypass first-world wages, benefits (private and public) and regulations, this will cause a race to the bottom and with it deteriorating living standards. This is exactly what we’re seeing. It is the very opposite of the promised prosperity.

If macroeconomics was a science, the free-trade hypothesis would be clearly disproved. Let’s hope economists with integrity separate the wheat from the chaff and demand scientific rigor be applied to the field this decade of economic quagmire caused by three decades of reckless right-wing ideology.

nakedApe42 on October 16, 2012 at 6:20 am

“Or, one can look at the same underlying consensus conclusion, and conclude that Canadians would be better off by lowering corporate income tax.”

These unfocused corporate tax cuts were supposed encourage businesses to invest in productivity-boosting equipment and “create jobs.” Instead productivity growth is at all-time lows, hundreds of thousands of good-paying jobs have disappeared and corporations are hoarding “dead money”, not investing it.

If economists were scientists they would be ashamed that their hypothesis turned out to be so incredibly wrong. But they keep blathering on ignoring all of the evidence.

Why? One could surmise they are peddling ideology that is entirely self-serving to businessmen so they do it out of self-interest (their economic ideology is founded on people acting out of self-interest, after all.) And the reason they feel no shame? Because it is scientifically proven that con men (sociopaths) are utterly incapable of feeling shame.

nakedApe42 on October 16, 2012 at 6:31 am

“In any event, I’d suggest to you that since very few of the people who write in the economics/business section of newspapers are economists, the policy debates in those sections are probably not reflective of contemporary economic thinking.”

I would suggest that: a) you have no idea of what you’re talking about; or b) you are misrepresenting the facts.

BTW, medicine is a rigorous science. Macroeconomics is a joke because it’s polluted with agenda-driven ideologues who are not held to account for their blunders. In the latter part of the 19th century medical standards were established to weed out the charlatans. Hopefully, the field of macroeconomics can catch up during this decade of economic quagmire caused by incompetent hacks.

nakedApe42 on October 16, 2012 at 6:37 am

Well, the uptick in US employment was certainly a good thing for Obama’s chances, and one of the main predictors of the end of a political dynasty is a downturn in the economy. So if economists are not powerful then at least a few of the numbers they churn out are.

The question is whether economists should be blamed for the simplification, misuse (or even abuse) of their results. My guess is Suzuki would say economists should be well aware that their results are used by many to justify doing nothing to say the planet and as a result they are culpable. For the record, I don’t agree with Suzuki but I do understand how his premise leads to his conclusion.

StewartSmith on October 14, 2012 at 7:13 pm

I have to wonder: do people think that economists control the economy? So when bad things happen in the economy, it’s the economists who are to blame?

So says the master of the twitter blocking crowd, for those who don’t agree with his opinions. A tip of the hat.

Dot on October 15, 2012 at 9:31 am

Neoclassical economics put whoever has money or printing ability/pull in command of future investments. Other industries and actors often have superior judgement here. So there are modifications of Crowns and spending, modifications of central banks (fuller employment over low predictable inflation), modification of taxes. Is my prefered method of judging Partys and voting. I liked the Liberals and Greens carbon taxes in 2008. I liked the NDP corporate tax rate in the mid 20s to fix our finance and resource industry externalities. Auzzies have a resource tax. It pollutes the minds of PMs from the Prairies to have a currently non-renewable resource industry as your brain food.
I like that the Dems cap administrative spending with Obamacare and have a Buffett tax to discourage trading (and encourage other beneficial time utlities that don’t have lobby influence). Oh crap: ‘Nam.

I think those Fukushima tapes would be a great disaster and leadership exercise for cdn youth and adults alike. But not in English. The lack of such gvmt focus is a negative externality. Rich people aren’t so bright in Canada. That isn’t an externality as it provides humour.

As an economist…at what point do you stop espousing policies that are ultimately harmful to the economy (like $2/L gasoline like you mentioned in a reply to Stewart as an example) to reduce greenhouse gases when it becomes clear that such a reduction is not necessary and serves no useful purpose?

Specifically, the section on temperature: “The UK annual mean temperature has increased by around 0.25 °C when comparing 1981–2010 with 1971–2000. This is a similar difference to that between 1971–2000 and 1961–1990.
This trend in warming across the UK is consistent with that observed globally over land.”
.

Suzuki is a lying phoney! He is always lamenting about damage to the Environment, but how does he get around the Country on his many travels? Is it by Dog Team, or a Canoe, or maybe a Bicycle! Hell no, Suzuki just jumps on to the first available gas guzzling Jet Airplane!
And not only that, he does nothing to prevent Mt. St. Helens from erupting now and again causing more pollution in one Burp than all the cars have in the last Century.
Most trusted Canadian? I think it’s more like most LYING Canadian!

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